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Heterogeneity in the impact of health shocks on labour outcomes: evidence from Swedish workers

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  • Petter Lundborg
  • Martin Nilsson
  • Johan Vikström

Abstract

This article provides new evidence on heterogeneity in the impact of health shocks by using register-based data on the entire population of Swedish workers. We formulate a difference-in-difference design, where we compare the change in labour earnings across matched workers with a high and low level of education who experience the same type of health shocks. Our results suggest major heterogeneity in the effects, where a given health shock has a greater relative negative impact on low-skilled individuals/individuals with a low level of education. These results hold across different types of health shocks and become more pronounced with age. Low-skilled workers are also more likely to leave the labour force and receive disability insurance, sickness insurance, and unemployment benefits following a health shock. Our results suggest that heterogeneity in the effect of health shocks offers one explanation as to how the educational gradient in health arises.

Suggested Citation

  • Petter Lundborg & Martin Nilsson & Johan Vikström, 2015. "Heterogeneity in the impact of health shocks on labour outcomes: evidence from Swedish workers," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 715-739.
    • Handle: RePEc:oup:oxecpp:v:67:y:2015:i:3:p:715-739.
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    File URL: http://hdl.handle.net/10.1093/oep/gpv034
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